Credit score and scorecard development

Abstract

Share of Wallet (“SOW”) is a modeling approach that utilizes various data sources to provide outputs that describe a consumers spending capability, tradeline history including balance transfers, and balance information. These outputs can be appended to data profiles of customers and prospects and can be utilized to support decisions involving prospecting, new applicant evaluation, and customer management across the lifecycle. The outputs can be used as attributes to consider in developing a credit bureau scorecard.

Description

CROSS-REFERENCE TO RELATED APPLICATIONS[0001]This application is a continuation of U.S. patent application Ser. No. 11 / 977,751, filed Oct. 25, 2007 and entitled “Credit Score and Scorecard Development,” which is a continuation-in-part of U.S. patent application Ser. No. 11 / 257,379, filed Oct. 24, 2005, and entitled “Method And Apparatus For Estimating The Spend Capacity Of Consumers.” All the above applications are incorporated by reference herein in their entirety.BACKGROUND OF THE INVENTION[0002]1. Field of the Invention[0003]This disclosure generally relates to financial data processing, and in particular it relates to credit scoring, customer profiling, consumer behavior analysis and modeling.[0004]2. Background Art[0005]It is axiomatic that consumers will tend to spend more when they have greater purchasing power. The capability to accurately estimate a consumer's spend capacity could therefore allow a financial institution (such as a credit company, lender or any consumer serv...

AI Technical Summary

Benefits of technology

This approach allows for more precise estimation of consumer spending, enabling targeted marketing and credit scoring, thereby increasing transaction volumes and profitability while reducing the risk of defaults.

Problems solved by technology

It is axiomatic that consumers will tend to spend more when they have greater purchasing power.

A limited ability to estimate consumer spend behavior from point-in-time credit data has previously been available.

However, it is oftentimes difficult to confirm whether the lowered balance is the result of a balance transfer to another account.

Such balance transfers represent no increase in the consumer's capacity to spend, and so this simple model of consumer behavior has its flaws.

However, the vast majority of consumers do not maintain all such accounts with the same financial institution and the access to detailed financial information from other financial institutions is restricted by consumer privacy laws, disclosure policies and security concerns.

There is limited and incomplete consumer information from credit bureaus and the like at the aggregate and individual consumer levels.

Since balance transfers are nearly impossible to consistently identify from the face of such records, this information has not previously been enough to obtain accurate estimates of a consumer's actual spending ability.

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